Paid Family Leave Benefits Available to California Employees July 1, 2004

By Stuart W. Miller and Robyn Todd
[June 2004]

In 2002, the California legislature enacted a law extending the state’s disability compensation program to cover employees who take time off from work to care for a seriously ill family member or bond with a new child. The Paid Family Leave Insurance Program (“Paid Family Leave”) is administered by the State Disability Insurance (SDI) program and is funded entirely by employees through payroll deductions. Deductions were required to begin Jan. 1, 2004, and employees are eligible for benefits beginning July 1, 2004.

PROGRAM OVERVIEW

The Paid Family Leave Program. Before Paid Family Leave, employees who needed to take time off work for various reasons could do so under three laws. California SDI provides wage replacement for an employee’s own non-work-related injuries, illnesses or medical conditions. The federal Family and Medical Leave Act (“FMLA”) and California’s Family Rights Act (“CFRA”) entitle employees working for covered employers to take unpaid, job-protected leave to care for a new child, a seriously ill family member, or their own serious health condition.

Now, Paid Family Leave provides employees with paid time off to care for a seriously ill family member or a new child. However, an employer is not required to grant Paid Family Leave unless the employee is also legally entitled to take, and does take, that time off as FMLA or CFRA leave. Paid Family Leave determines whether the time off is paid or unpaid. So, for example, if an employee has already exhausted her entitlement of 12 weeks of FMLA/CFRA leave per 12-month period before she requests Paid Family Leave, the employer is not obligated to grant all or any part of a requested six week Paid Family Leave.

Employees Covered. Three classes of employees are covered for Paid Family Leave: (1) all employees covered by SDI, (2) all employees covered by a Voluntary Plan for SDI, and (3) self-employed individuals who participate in the SDI Elective Coverage Program. Any employees who pay into SDI are covered for Paid Family Leave, regardless of the employer’s number of employees.

Employees are not required to work a minimum amount of time to qualify for Paid Family Leave; they merely must suffer a loss of wages and satisfy the Paid Family Leave requirements. Employee contributions to Paid Family Leave under SDI are mandatory, and employees may not opt out of making these contributions.

Benefits. An employee may receive up to six weeks of Paid Family Leave benefits in any 12-month period. Weekly benefits range from $50 to $728, depending on the employee’s wages. Benefits are payable for claims beginning July 1, 2004. To cover the initial cost of benefits, the SDI contribution rate increased by 0.08 percent for 2004 and 2005. Thereafter, the SDI rate will be based on funding needs for SDI and Paid Family Leave. The taxable wage limit for 2004 is $68,829, increasing to $79,418 for 2005.

Eligibility Requirements

An employee may file a claim with the Employment Development Department for Paid Family Leave benefits for the following reasons:

1. To care for a seriously ill child, parent, spouse or domestic partner. “Child” means a biological, adopted or foster child, a stepchild, legal ward, child of a domestic partner, or a person to whom the employee stands in loco parentis. “Parent” means a biological, foster, or adoptive parent, a stepparent, legal guardian or other person who stood in loco parentis to the employee when the employee was a child. It does not include a mother- or father-in-law. To be “seriously ill” means to have an illness, injury, impairment or physical or mental condition that involves inpatient care in a hospital, hospice or residential healthcare facility, or continuing treatment or continuing supervision by a healthcare provider.
   
   
2. To bond with a new child after birth, or with a minor child in connection with the adoption or foster care placement of the child. Benefits are limited to bonding during the first year after birth, adoption or foster care placement.

In addition to satisfying the reasons above, an employee is subject to the following requirements for filing a Paid Family Leave claim:

1. The employee must provide a medical certificate upon filing a claim with EDD when the claim is based on caring for a seriously ill family member. The certificate must include details such as diagnosis, date of onset of the illness, probable duration and the estimated time care is needed. It must also state that the serious health condition warrants the participation of the employee to provide care (which includes providing psychological comfort and arranging third party care).
   
   
2. Separate certification filed with the EDD is required for leave associated with child bonding.
   
   
3. There is a seven calendar day waiting period before benefits are paid. The employer may require an employee to take up to two weeks of earned but unused vacation leave prior to receiving Paid Family Leave benefits. One week of this vacation leave will be applied to the waiting period.
   
   
4. An employee is not eligible for Paid Family Leave on any day that another family member is able and available to provide care for the same time period the employee is providing care.
   
   
5. An employee is ineligible for Paid Family Leave if he or she is receiving SDI, Unemployment Insurance or Workers’ Compensation benefits.
   
   
6. An employee who is entitled to leave under FMLA or CFRA must take Paid Family Leave concurrently with leave taken under those laws. As noted above, an employer is not obligated to grant Paid Family Leave unless the employee is entitled to take that time off as FMLA or CFRA leave.

Employers should keep in mind the following issues when navigating this new leave opportunity with employees:

• Employers may not require employees to take all six weeks of Paid Family Leave benefits at once. The law does not establish a minimum number of hours, days or weeks that an employee must take these benefits.
  
  
• Paid Family Leave is a benefit separate from FMLA and CFRA. Unlike those laws, Paid Family Leave by itself neither protects an employee’s job nor requires an employer to grant time off to the employee.
  
  
• While employers may opt to require an employee to take up to two weeks of earned but unused vacation leave, they are not relieved of any collective bargaining duties they may have with respect to vacation leave.
  
  
• Employers may not require employees to use sick leave instead of vacation leave.
  
  
• Employees may file claims for benefits to care for a sick parent who is outside California.

For further information, contact:

Stuart W. Miller San Francisco (415) 276-6584 stuartmiller@dwt.com

This Employment Law Advisory is a publication of the Employment Law Department of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of recent developments in employment law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

Copyright © 2004, Davis Wright Tremaine LLP.

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